Expert Analysis: Making the Most of Gender Based Financing: What it takes to bridge the gender finance gap in African Agriculture

by Maureen Munjua,Country Representative, Kenya

For at least the last 15 years, the international development community has increasingly prioritized improving social and economic outcomes for women. As Tanager’s team prepares to participate in AGRF 2020 – “the world’s premier forum for African agriculture, bringing together stakeholders in the agricultural landscape to take practical actions and share lessons that will move African agriculture forward”, I am especially interested in how the international community can leverage this increased focus to improve women’s access to finance.

At Tanager we know that access to finance is a key component for increasing women’s incomes and equality at the local level and in the global community at large.  And to be sure, progress has been made. Some recent achievements include: Many Governments have set aside funds for women in their budgeting processes; financial institutions have tailor-made products targeting women; development institutions like International Finance Corporation, the World Bank, and the African Development Bank have specific programs and funds that are tailored to unlock access to finance for women.

However, despite these gains, access to finance remains a challenge for women in agriculture. According to the World Bank, of the world’s unbanked population, over %56 are women. This number is higher in developing countries –  for example, almost %75 of unbanked people in Kenya are women.  Given the fact that the majority of economically active women in developing countries work in agriculture, the gender gap in finance limits the potential of millions of women worldwide to fully achieve their economic potential.

To understand how we as a global community can close this gap, we must first examine What gender considerations do financial institutions employ when developing financial products? How differently do men and women access and utilize available financial resources? What are the opportunities for co-creation between different ecosystem stakeholders to unlock access?

The complexity of access to finance calls for a co-created approach by all stakeholders to unlock financial resources and must start by looking at access to finance from a gender lens. In the agriculture ecosystem, men and women play predominantly different roles within the sector or within specific value chains. Statistics show that women are actively involved in production yet still lack access to productive resources like land, access to inputs, extension services, collateral for credit facilities among others. These limitations all too often limit the agency and benefits for women within the sector and translate to their input into the sector not being considered as commercially viable. Development efforts should aim to unlock these barriers and create an equal playing field for women and men in production, markets, and decision making platforms at community and policy levels.

Governments and private sector lending institutions should strive to understand the underlying gender constraints while making policy and regulatory frameworks, developing financial products, and establishing distribution models and mechanisms – for example, digital platforms and agency banking, among other models. With the telecom and technology developments in Africa, these models provide an opportunity to enhance inclusive access to finance but have historical and cultural impediments that could also exclude many women.

Climate change also plays a limiting role. The agricultural sector is probably one of the most affected by climate change issues. The sector has seen a rise in innovative risk mitigation mechanism with financial institutions developing agricultural products with aspects of agri-insurance. Risk sharing mechanisms at scale are one way of ensuring that the sector is de-risked and access to finance is unlocked. Utilization of finance is another aspect that stakeholders working in this space need to factor in. The ability to utilize funds to grow agri-enterprises requires capacity building of entrepreneurs.

Tanager is already focused on these priorities – we make women’s access to extension services a priority across our work in Africa and East Asia and we are committed to collecting sex disaggregated data to better inform current realities and future projects. In Burkina Faso, Tanager is building poultry market systems and exploring blended finance options through linkages with micro-finance institutions. In Nigeria, Ethiopia, Tanzania and Burkina Faso, through the IGNITE technical assistance mechanism, we work with Africa-based institutions to help them understand and integrate gender responsive approaches in their way of doing business – including government policies, development projects as well as private sector including financial institutions.

To close this gap, we must work on two fronts: we must improve women’s access to extension services, credit, and savings accounts, markets while also working to change the perception of women at the farm level. This is a “chicken and egg” situation – to change perceptions we must increase access to finance and to increase access to finance we must change perception. We must work on these issues simultaneously.

As we gather around the virtual conference room to participate in AGRF 2020, a milestone of 10 years, we must think differently, be bold in our leadership and bring practical solutions to co-create life changing partnerships for the African agriculture sector. Solutions that will finally unlock inclusive finance for all but more importantly for women in agriculture.